Ray Montgomery, et al. v. U.S. Bank, N.A., as Trustee for MLM1 Trust Series 2006-HE4, Bank of America

• Court: District Court, N.D. California
• Decided: December 1, 2025
• Docket: 4:25-cv-03571
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 RAY MONTGOMERY, et al., Case No. 25-cv-03571-HSG

8 Plaintiffs, ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS 9 v. Re: Dkt. Nos. 7 10 U.S. BANK, N.A., AS TRUSTEE FOR MLM1 TRUST SERIES 2006-HE4, BANK 11 OF AMERICA,

12 Defendant.

13 Defendants1 move to dismiss the complaint. Dkt. No. 7. The Court finds this matter 14 appropriate for disposition without oral argument, and it is deemed submitted. See Civil L.R. 7- 15 1(b). The Court GRANTS Defendants’ motion to dismiss. 16 I. REQUEST FOR JUDICIAL NOTICE 17 Defendants filed a request for judicial notice in support of their motion to dismiss. Dkt. 18 No. 8. Plaintiffs do not oppose Defendants’ request. In Khoja v. Orexigen Therapeutics, the 19 Ninth Circuit discussed the judicial notice rule and incorporation by reference doctrine. See 899 20 F.3d 988 (9th Cir. 2018). Under Federal Rule of Evidence 201, a court may take judicial notice of 21 a fact “not subject to reasonable dispute because it . . . can be accurately and readily determined 22 from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(2). 23 Accordingly, a court may take “judicial notice of matters of public record,” but “cannot take 24

25 1 Defendants are incorrectly identified in the caption. Defendants are Nationstar Mortgage LLC d/b/a Mr. Cooper (“Nationstar”) and U.S. Bank National Association, as Trustee, successor in 26 interest to Bank of America, National Association, as Trustee, successor by merger to LaSalle Bank National Association, as Trustee for Merrill Lynch Mortgage Investors Trust, Mortgage 27 Loan Asset-Backed Certificates, Series 2006-HE4 (“U.S. Bank”). Dkt. No. 7 at 10. Unless 1 judicial notice of disputed facts contained in such public records.” Khoja, 899 F.3d at 999 2 (citation and quotations omitted). The Ninth Circuit has held that if a court takes judicial notice of 3 a document, it must specify what facts it judicially noticed from the document. Id. at 999. 4 Further, “[j]ust because the document itself is susceptible to judicial notice does not mean that 5 every assertion of fact within that document is judicially noticeable for its truth.” Id. 6 Defendants request that the Court take judicial notice of several documents recorded in the 7 Contra Costa County Recorder’s Office: a Deed of Trust dated May 24, 2006, substitutions of 8 Trustee, assignments of the Deed of Trust, and a Notice of Default. See Dkt. No. 8, Exs. 1–7, 10. 9 These documents are matters of public record not generally subject to dispute, and it does not 10 appear that Plaintiff has any objections to Defendant’s request for judicial notice. See Dkt. No. 19. 11 Accordingly, the Court finds that judicial notice of these exhibits is appropriate. See, e.g., Perez v. 12 Am. Home Mortg. Servicing, Inc., No. C 12-00932 WHA, 2012 WL 1413300, at *2 (N.D. Cal. 13 Apr. 23, 2012) (taking judicial notice of deed of trust, notice of default, assignment of deed of 14 trust, and substitution of trustee, all recorded with Alameda County Recorder’s Office). 15 Defendants also request that the Court take judicial notice of several documents related to 16 Plaintiffs’ prior lawsuits against them, as well as Plaintiffs’ prior bankruptcy proceedings: case 17 dockets downloaded from the district and bankruptcy courts’ PACER websites, as well as 18 Defendants’ briefs and court orders in those cases. See Dkt. No. 8, Exs. 8–9, 11–16. In the 19 preclusion context, a court may take judicial notice of the record in earlier proceedings. 20 Manufactured Home Cmtys. Inc. v. City of San Jose, 420 F.3d 1022, 1037 (9th Cir.2005). The 21 Court takes judicial notice of the case dockets and court orders and any factual findings within 22 them, as they comprise the record in earlier proceedings. The Court also takes judicial notice of 23 Defendants’ briefs in prior cases simply to identify the arguments made in them, but does not take 24 judicial notice of any facts asserted there. 25 II. BACKGROUND 26 This case arises from Defendants’ foreclosure on Plaintiffs’ property. In 2006, Plaintiffs 27 obtained a loan from First NLC Financial Services, LLC to buy their home in Richmond, 1 became successors in interest on the loan. See id., Exs. 2–7. Plaintiffs brought an initial lawsuit 2 against Defendants related to the foreclosure on their property, but their case was dismissed with 3 prejudice for failure to prosecute. Id., Ex. 8. Plaintiffs defaulted on the loan in February 2022. 4 Id., Ex. 10. In January 2024, Plaintiffs filed a second lawsuit against Defendants, again 5 challenging the loan, but that case was also dismissed. Id., Exs. 11, 13. 6 Plaintiff Ray Montgomery filed for bankruptcy in October 2024, but the court dismissed 7 his case on December 2, 2024. Id., Ex. 14. Before doing so, in November 2024, the Bankruptcy 8 Court lifted the automatic stay under 11 U.S.C. §§ 362(d)(1), (2), and (4) in an order that was 9 binding in any other bankruptcy proceeding concerning Plaintiffs’ residence for the following two 10 years. Id., Ex. 15 at 2. Despite the court’s order, Marie Montgomery initiated bankruptcy 11 proceedings on December 20, 2024. Dkt. No. 1-1 at 8; Dkt. No. 8, Ex. 16. 12 In this case, Plaintiffs contend that Defendants improperly securitized the loan, engaged in 13 deceptive and fraudulent lending practices, and falsified recorded documents, and that Ms. 14 Montgomery’s bankruptcy proceeding initiated an automatic stay that prevented foreclosure. See 15 generally Dkt. No. 1-1. Nevertheless, shortly after Ms. Montgomery initiated bankruptcy 16 proceedings, Defendants foreclosed on the property. Dkt. No. 1-1 at 8. Plaintiffs contend that the 17 foreclosure sale must be set aside, and they seek a declaratory judgment that the Assignment of 18 their loan, Substitution of Trustee, Notice of Default, and Notice of the Sale are void. See 19 generally id. 20 All told, Plaintiffs have now filed three cases against Defendants to challenge the 21 foreclosure of their property: 22 • Montgomery et al. v. U.S. Bank, N.A., et al., Case No. 21-cv-05242-EMC 23 (“Montgomery I”), filed in Contra Costa Superior Court on June 1, 2021, and removed 24 to the Northern District of California by Defendants on July 7, 2021. 25 • Montgomery et al v. U.S. Bank, N.A. et al., Case No. 24-cv-00557-RFL (“Montgomery 26 II”), filed in the United States District Court for the Northern District of California on 27 January 4, 2024. 1 March 17, 2025, and removed to the Northern District of California by Defendants on 2 April 23, 2025. Dkt. No. 1-1. 3 On November 22, 2021, Montgomery I was dismissed with prejudice. Case No. 21-cv- 4 05242-EMC, Dkt. No. 26. Montgomery II was also dismissed. Case No. 24-cv-00557-RFL, Dkt. 5 No. 20. 6 III. MOTION TO DISMISS 7 Defendants argue this case must likewise be dismissed under the doctrine of res judicata. 8 The Court agrees. Res judicata, also known as claim preclusion, prevents parties from relitigating 9 “any claims that were raised or could have been raised in a prior action.” Stewart v. U.S. Bancorp, 10 297 F.3d 953, 956 (9th Cir. 2002) (quotations omitted). The doctrine “serves to promote judicial 11 efficiency by preventing multiple lawsuits and to enable the parties to rely on the finality of 12 adjudications.” Dodd v. Hood River County, 136 F.3d 1219, 1224–25 (9th Cir. 1998). “Res 13 judicata applies when there is: ‘(1) an identity of claims; (2) a final judgment on the merits; and 14 (3) identity or privity between parties.’” Stewart, 297 F.3d at 956. Each element is met here. 15 “The central criterion in determining whether there is an identity of claims between 16 [judgments] is whether the two suits arise out of the same transactional nucleus of facts.” Frank v. 17 United Airlines, Inc., 216 F.3d 845, 851 (9th Cir. 2000) (quotations omitted). “Whether two suits 18 arise out of the same transactional nucleus depends upon whether they are related to the same set 19 of facts and whether they could conveniently be tried together.” ProShipLine Inc. v. Aspen 20 Infrastructures Ltd., 609 F.3d 960, 968 (9th Cir. 2010) (cleaned up). The Ninth Circuit has 21 explained that although “[a] plaintiff need not bring every possible claim,” “where claims arise 22 from the same factual circumstances, a plaintiff must bring all related claims together or forfeit the 23 opportunity to bring any omitted claim in a subsequent proceeding.” Turtle Island Restoration 24 Network v. U.S. Dep’t of State, 673 F.3d 914, 918 (9th Cir. 2012). 25 Each of Plaintiffs’ cases concern the same property, and the same loan. And in each case, 26 Plaintiffs challenge Defendants’ foreclosure on that property based on the “same set of facts,” 27 ProShipLine, 609 F.3d at 968, including allegations that Defendants improperly securitized the 1 Plaintiffs’ claims here mirror those brought in Montgomery I, and the complaints in each case use 2 almost identical language. In each, Plaintiffs bring claims for slander of title, equitable 3 cancellation of assignment, violations of the California Homeowners Bill of Rights, intentional 4 infliction of emotional distress, violations of the California Business and Professions Code, and 5 accounting. Compare Dkt. No. 1-1 with Montgomery I, 21-cv-05242-EMC, Dkt. No. 1 (bringing 6 all the same claims, plus one more for “reasonable reliance; detrimental reliance”). And even if 7 Plaintiffs asserted new causes of action and legal theories they did not raise in Montgomery I, that 8 would not change the Court’s analysis. See United States ex rel. Northrop Corp. 147 F.3d 905, 9 909 (9th Cir. 1998). That is because “[n]ewly articulated claims based on the same nucleus of 10 facts may still be subject to a res judicata finding if the claims could have been brought in the 11 earlier action.” Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 322 12 F.3d 1064, 1078 (9th Cir. 2003); see also McClain v. Apodaca, 793 F.2d 1031, 1034 (9th Cir. 13 1986) (“[A plaintiff] cannot avoid the bar of res judicata merely by alleging conduct by the 14 defendant not alleged in his prior action or by pleading a new legal theory.”). 15 Plaintiffs argue that the sale of the property is void and must be set aside based on their 16 mistaken belief that Ms. Montgomery’s bankruptcy proceeding initiated a stay on foreclosure. 17 Dkt. No. 19 at 2; Dkt. No. 1-1 at 8.2 But judicially noticeable documents show that the stay was 18 lifted, and that the court’s order applied to any bankruptcy proceeding concerning the property for 19 the following two years. Dkt. No. 8, Ex. 15. The record indisputably shows that there was no stay 20 in effect when Ms. Montgomery filed for bankruptcy, related to the same property, less than two 21 months later. The Court therefore finds that the first element of res judicata, identity of the claims, 22 is satisfied. 23

24 2 Plaintiffs did not timely file an opposition to Defendants’ motion to dismiss. However, the Court directed Defendants to treat Dkt. No. 19, Plaintiffs’ response to its order to show cause as an 25 opposition. In their response, Plaintiffs argued that the foreclosure sale took place despite Ray [sic] Montgomery’s subsequent bankruptcy proceeding and the automatic stay stemming from that 26 action. Plaintiffs later filed a motion to amend their response to the order to show cause, Dkt. No. 23, correcting their argument to reflect that it was Marie Montgomery, not Ray Montgomery, who 27 filed the subsequent bankruptcy action. Even if the Court considered Plaintiffs’ amended response 1 The Court finds that the second element, a final judgment on the merits, is also met here. 2 || Plaintiffs’ initial action was dismissed with prejudice for failure to prosecute, Montgomery I, 21- 3 || cv-05242-EMC, Dkt. No. 26 (“Clerk’s Notice Dismissing Plaintiff's Amended Complaint with 4 || Prejudice for Failure to Prosecute”), which constitutes a final judgment on the merits for res 5 || judicata purposes. See Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 714 (9th Cir. 6 || 2001) (treating dismissal for failure to prosecute under Rule 41(b) as an adjudication on the merits 7 || for purposes of preclusion); Boeken v. Philip Morris USA, Inc., 48 Cal. 4th 788, 793 (2010) (“a 8 || dismissal with prejudice is the equivalent of a final judgment on the merits” even where “[t]he 9 || record before us does not indicate the reason for the dismissal”). 10 Third, and finally, the Court finds that the parties are the same in each of Plaintiffs’ cases. 11 Defendants have therefore satisfied all three elements of res judicata. 12 || IV. CONCLUSION 13 Because all three elements of res judicata are met, the Court GRANTS Defendants’ 14 || motion to dismiss, Dkt. No. 7. The dismissal is with prejudice because the deficiency is incurable. 15 Cf. Miller v. Wholesale America Mortgage, No. 17-cv-05495-LB, 2018 WL 306714 (N.D. Cal. 16 || Jan. 5, 2018) (dismissing complaint that was barred by res judicata with prejudice because 3 17 amendment would be futile). The Court also TERMINATES AS MOOT Plaintiffs’ motion for 18 leave to amend their response to the order to show cause, Dkt. No. 23. The Clerk is directed to 19 enter judgment in favor of Defendants and to close the case. 20 IT IS SO ORDERED. 21 Dated: December 1, 2025 » Abspurel 5 □□□ HAYWOOD S. GILLIAM, JR. 23 United States District Judge 24 25 26 27 28